There are a number of key changes to CPR 3 and PD 3 that apply to proceedings commenced on or after 6 April 2016.
- Proceedings that are commenced on or after 6 April 2016 and made on behalf of a child are excluded from costs management. This exception will continue to apply once the child reaches majority, unless the court orders otherwise (CPR 3.12(1)).
- Where the stated value of the claim on the claim form is less than £50,000, parties must file their costs budgets with their directions questionnaire (CPR 3.13(1)(a)).
- In any other case, parties must file their costs budgets no later than 21 days before the first case management conference (CMC) (CPR 3.13(1)(b)).
- When a party files and exchanges a budget, all other parties (excluding litigants in person) must file an agreed budget discussion report no later than seven days before the first CMC (CPR 3.13(2)).
- In cases where a party’s budgeted costs do not exceed £25,000, or the value of the claim as stated on the claim form is less than £50,000, the parties must only use the first page of Precedent H.
- The budget discussion report required by CPR 3.13(2) must set out the figures which are agreed for each phase, the figures not agreed, and a brief summary of the grounds of dispute (PD 3, paragraph 6A). The parties are encouraged to use the Precedent R budget discussion report annexed to PD 3.
- It is now explicit that judges should not consider the hourly rates claimed. PD 3, paragraph 7.10 states: ‘ The making of a costs management order under rule 3.15 concerns the totals allowed for each phase of the budget. It is not the role of the court in the costs management hearing to fix or approve the hourly rates claimed in the budget. The underlying detail in the budget for each phase used by the party to calculate the totals claimed is provided for reference purposes only to assist the court in fixing the budget.’
Parties must follow the Precedent H guidance notes in all respects. This largely repeats past versions of the guidance, although there are now a few additions.
(1) Save in exceptional circumstances, the parties are not expected to lodge any documents other than Precedent H and the budget discussion report.
(2) In deciding the reasonable and proportionate costs of each phase of the budget, the court will have regard to the factors set out at CPR 44.3(5) and 44.4(3), including a consideration of the circumstances in which the work was done, as opposed to where the case is heard.
(3) Assumptions that are reflected in the guidance document are not to be repeated. Only assumptions that significantly impact on the level of costs claimed, such as the duration of the proceedings, the number of experts and witnesses, or the number of interlocutory applications that are envisaged are to be repeated. Brief details only are required in the box beneath each phase. Additional documents should be included only where necessary and, where they are disregarded by the court, the cost of preparation may be disallowed.
(4) The time spent in preparing the budget and associated material must not be claimed in the draft budget under any phase. The permitted figure should be inserted once the final budget figure has been approved by the court. These figures have not been changed. The recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1 per cent of the approved or agreed budget. All other recoverable costs of the budgeting and costs management process (including, presumably, the new agreed discussion budget reports) shall not exceed 2 per cent of the approved or agreed budget.
Procedure for assessment of costs and default provisions
- CPR 47.6(2) has been amended so that when detailed assessment proceedings are commenced, the receiving party must serve a copy of the notice of commencement, the bill and, if a costs management order has been made, the costs breakdown.
- PD 47, paragraph 5.8 has been amended. Where the case commenced on or after 1 April 2013, the bill covers costs for work done both before and after that date and the costs are to be assessed on the standard basis, the bill must be divided into parts so as to distinguish between costs shown as incurred for work done before 1 April 2013, and for work done on or 1 April 2013 (PD 47, paragraph 5.8(7)).
- Where a costs management order has been made, the costs are to be assessed on the standard basis. Where the receiving party’s budget has been agreed by the paying party or approved by the court, the bill must be divided into separate parts so as to distinguish between the costs claimed for each phase of the last approved or agreed budget. Within each such part, the bill must distinguish between the costs shown as incurred in the last agreed or approved budget, and the costs shown as estimated (PD 47, paragraph 5.8(8)).
- Where a costs management order has been made and the receiving party’s budget has been agreed by the paying party or approved by the court, the costs of initially completing Precedent H and the other costs of the budgeting and costs management process must be set out in separate parts (PD 47, paragraph 5.8(9)).
Pilot for insolvency express trials
- PD 51P includes provisions relating to a pilot for insolvency express trials (IET). The pilot seeks to ‘provide litigants in Bankruptcy and Companies Court of the High Court with a quick, more streamlined procedure, and an early date for trial of disposal of simple applications’. The pilot will be carried out from 1 April 2016 to 1 April 2018 and operate in the Bankruptcy and Companies Courts and in proceedings before the Bankruptcy Registrars.
- The pilot is designed to deal with simple applications made to a Bankruptcy Registrar, which can be disposed of in no more than two days, require limited directions (as opposed to case management) and disclosure, and where costs of each party will not exceed £75,000 (excluding VAT and court fees).
- IET proceedings must be commenced by application (Form 71A in schedule 4 to the Insolvency Rules 1986). The PD outlines a number of formalities and requirements that must be complied with when making such applications.
Wide-ranging changes have been made in respect of applications for charging orders made on or after 6 April 2016. The 83rd update implements a new procedure for charging order applications. It is highly likely that this will drastically reduce the number of hearings required.
- Applications made on or after 6 April 2013 must be made to the County Court Money Claims Centre (CCMCC), unless the application is for a charging order over an interest in a fund in court. The application must be in the form and contain the information required by PD 73.
- Most importantly, an application for a charging order will now initially be dealt with without a hearing if the application is only for a charging order on the judgment debtor’s interests in land (CPR 73.4(3)).
- However, it will not be dealt with on paper is if it is an application under section 2(1)(b)(i) of the Charging Orders Act 1979 (claims against trustees), in respect of partnership property under section 23 of the Partnership Act 1890, where an installment order has been made before 1 October 2012, or where the court officer considers that the application should be dealt with by a judge.
- If any person objects to the court making a final charging order, that person must file and serve on the judgment creditor written evidence stating the grounds of objection no later than 28 days after service on that person of the application notice and interim order. If this occurs, the court must transfer the application for hearing to the judgment debtor’s home court.
- Unless objections have been received and the case is transferred, the application will be considered by a judge upon expiry of the 28-day period (starting on the date the last person entitled to service under CPR 73.7 was served with a copy of the interim order).
- When considering the application following expiry of the relevant period or following transfer, the judge may make the final charging order with or without modification, discharge the interim charging order and dismiss the application, decide any issues in dispute, direct a trial, give directions or make such other order as the court considers appropriate (CPR 73.10(7)).
- Where the final charging order has been made without a hearing under CPR 73.10(7), any application to discharge or vary a charging order must be made to the CCMCC. The application will then be transferred for a hearing to the judgment debtor’s home court (CPR 73.10B(1)(2)).
- Where the final charging order was made at a hearing, any application to discharge or vary a charging order must be made to the court which made the charging order. The court may direct that any interested person be joined as a party to such an application or that the application be served on any person (CPR 73.10B(4)).
Orders for sale
- A claim for an order for sale should be made to the judgment debtor’s home court if the order was made at the CCMCC (CPR 73.10C).
- If the order was not made at the CCMCC, the claim should be made to the court which made the charging order, unless that court does not have jurisdiction to make an order for sale (CPR 73.10C).
- The claimant must use the CPR 8 procedure and a copy of the charging order must be filed with the claim form.
Applications for attachment of earnings orders
Similar changes are made to applications for attachment of earnings orders (CPR 89). The new provisions are detailed and should be read by every litigator before making an application for an order.
- Applications must be made to the CCMCC. They must include a certificate of the amount of money remaining and that the whole or part of any installment due remains unpaid.
- If the order is sought to enforce an order of a magistrates court, the applicant must also file with the application a certified copy of the order, and a witness statement verifying the amount due under the order or a certificate by the designated magistrates court officer.
- Notice of the application and reply form must be served on the debtor by the court. The debtor must then file a completed reply form within eight days (CPR 89.5).
- A court officer may at any stage of the proceedings send to the debtor’s employer a notice requesting them to give to the court a statement of the debtor’s earnings (CPR 89.6).
- If the court officer receives the debtor’s reply form and has sufficient information to make an attachment of earnings order, they may make such an order. This will be sent to the parties and the debtor’s employer. Any party may then, within 14 days of service, apply on notice for the order to be reconsidered. The matter will then be transferred to the debtor’s home court. The District Judge may then confirm the order, or set it aside and make a new order following the hearing (CPR 89.7).
- If the court officer does not make an order, the matter will be referred to a District Judge who may determine the application without a hearing or transfer the application to the debtor’s home court for a hearing. Again, the parties have 14 days to apply for the order to be reconsidered.
- If a creditor does not appear at the initial hearing (in cases where the application is not first considered without a hearing) the court may proceed to hear the application and make an order if the creditor has received a witness statement from the creditor or a request from the creditor for the court to proceed in any event.
- No attachment of earnings order may be made if the debt is of less than £50.